Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or a change in an underlying asset, liability, rate or index. For additional

descriptions of our guarantees, see Note 13 (Guarantees and Other Commitments) in our 2021 Form 10-K. Table 11.1 shows carrying value and maximum exposure to loss on our guarantees.

Table 11.1: Guarantees – Carrying Value and Maximum Exposure to Loss


			Maximum exposure to loss
(in millions)	Carrying value of obligation (asset)		Expires in one year or less	Expires after one year through three years	Expires after three years through five years	Expires after five years	Total	Non-investment grade
September 30, 2022
Standby letters of credit (1)	$	116	15,299	4,170	2,064	432	21,965	6,557
Direct pay letters of credit (1)	13		1,480	2,512	464	6	4,462	1,360
Written options (2)	725		14,127	6,779	1,399	460	22,765	17,171
Loans and LHFS sold with recourse (3)	16		302	916	3,486	8,896	13,600	11,457
Exchange and clearing house guarantees	—		—	—	—	4,438	4,438	—
Other guarantees and indemnifications (4)	—		583	1	10	183	777	527
Total guarantees	$	870	31,791	14,378	7,423	14,415	68,007	37,072
December 31, 2021
Standby letters of credit (1)	$	119	13,816	5,260	1,572	460	21,108	6,939
Direct pay letters of credit (1)	6		1,597	2,137	1,283	4	5,021	1,373
Written options (2)	(280)		12,107	4,575	513	36	17,231	13,645
Loans and LHFS sold with recourse (3)	20		71	943	3,610	8,650	13,274	11,268
Exchange and clearing house guarantees	—		—	—	—	8,100	8,100	—
Other guarantees and indemnifications (4)	—		797	2	12	263	1,074	756
Total guarantees	$	(135)	28,388	12,917	6,990	17,513	65,808	33,981

(1)Standby and direct pay letters of credit are reported net of syndications and participations.

(2)Written options, which are in the form of derivatives, are also included in the derivative disclosures in Note 14 (Derivatives). Carrying value net asset position is a result of certain deferred premium option trades.

(3)Represents recourse provided, predominantly to the GSEs, on loans sold under various programs and arrangements.

(4)Includes indemnifications provided to certain third-party clearing agents. Estimated maximum exposure to loss was $138 million and $216 million with related collateral of $1.4 billion and $2.3 billion as of September 30, 2022, and December 31, 2021, respectively.

Maximum exposure to loss represents the estimated loss that would be incurred under an assumed hypothetical circumstance, despite what we believe is a remote possibility, where the value of our interests and any associated collateral declines to zero. Maximum exposure to loss estimates in

Table 11.1 do not reflect economic hedges or collateral we could use to offset or recover losses we may incur under our guarantee agreements. Accordingly, these amounts are not an indication of expected loss. We believe the carrying value is more representative of our current exposure to loss than maximum exposure to loss. The carrying value represents the fair value of the guarantee, if any, and also includes an ACL for guarantees, if applicable. In determining the ACL for guarantees, we consider the credit risk of the related contingent obligation.

For our guarantees other than written options, non-investment grade represents those guarantees on which we have a higher risk of performance under the terms of the guarantee, which is determined based on an external rating or an internal credit grade that is below investment grade. For written options, non-investment grade represents those guarantees where the current intrinsic values would require us to perform under the contract.

MERCHANT PROCESSING SERVICES We provide debit and credit card transaction processing services through payment networks directly for merchants and as a sponsor for merchant processing servicers, including our joint venture with a third party that is accounted for as an equity method investment. In our role as the merchant acquiring bank, we have a potential obligation in connection with payment and delivery disputes between the merchant and the cardholder that are resolved in favor of the cardholder, referred to as a charge-back transaction. We estimate our potential maximum exposure to be the total merchant transaction volume processed in the preceding four months, which is generally the lifecycle for a charge-back transaction. As of September 30, 2022, our potential maximum exposure was approximately $749.9 billion, and related losses, including those from our joint venture entity, were insignificant.

GUARANTEES OF SUBSIDIARIES The Parent fully and unconditionally guarantees the payment of principal, interest, and any other amounts that may be due on securities that its 100% owned finance subsidiary, Wells Fargo Finance LLC, may issue. These securities are not guaranteed by any other subsidiary of the Parent. The guaranteed liabilities were $1.0 billion and $1.2 billion at September 30, 2022, and December 31, 2021, respectively. These guarantees rank on parity with all of the Parent’s other unsecured and unsubordinated indebtedness.

OTHER COMMITMENTS To meet the financing needs of our customers, we may enter into commitments to purchase debt and equity securities to provide capital for their funding, liquidity or other future needs. As of September 30, 2022, and December 31, 2021, we had commitments to purchase debt securities of $165 million and $18 million, respectively, and commitments to purchase equity securities of $3.0 billion and $2.4 billion, respectively.

As part of maintaining our memberships in certain clearing organizations, we are required to stand ready to provide liquidity to sustain market clearing activity in the event unforeseen events occur or are deemed likely to occur. Certain of these obligations are guarantees of other members’ performance and accordingly are included in Table 11.1 in Other guarantees and indemnifications.

Also, we have commitments to purchase loans and securities under resale agreements from certain counterparties, including central clearing organizations. The amount of our unfunded contractual commitments was $11.9 billion and $11.0 billion as of September 30, 2022, and December 31, 2021, respectively.

Given the nature of these commitments, they are excluded from Table 4.4 (Unfunded Credit Commitments) in Note 4 (Loans and Related Allowance for Credit Losses).